As the first officer said to the captain on board the Titanic: “Sir, I have this sinking feeling.” So too, international steel prices are sliding downward, the impact of which on the Australian domestic market will be interesting to observe. A key moment came last week when iron ore dropped below the benchmark of USD 100 per metric tonne. The last time it did that was in November of 2022 when it struck the ultra-low $77 m/t (as the graph in our website AustralianSteel.com clearly shows (https://australiansteel.com/steel-prices-raw-materials). At its current $99 m/t, iron ore has thus fallen almost 30% from its high of $141 at the start of this year. Coking coal has likewise eased. Its drop on the Singapore Stock Exchange futures from $319 m/t a month ago to its present level of $257 represents a decline of almost 20%. These falls are reflected in ASN´s unique Steel Feedstock Index (SFI). The Index shows the combined price of the main ingredients used in the BOF method of steelmaking. Since the beginning of this year, the SFI has fallen from 577 to 447 which equates to 22.5%. In such a climate, one would expect international steel prices to be falling – and they are. Here are three popular

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products, each shown in our graphs. China rebar is down 11% since January 1. South-East Asia rebar is off by 6% in the same period. Meanwhile, HRC North America has dropped a hefty 27% since the year began: from $1210 m/t down to $880. A key driver in all this is weak rebar consumption in China arising from insufficient construction projects: especially home building. An under-performing Chinese economy is also subduing demand for flat products used in cars and home appliances. Most analysts are bearish on the market and expect demand to remain weak into the near future. Accordingly, the likely direction for steel prices in Australia and New Zealand in the short term is not difficult to predict.

InfraBuild has announced a net profit of AUD 40 million for the first half of the 2024 financial year, arising from revenue of $2.5 billion. “We continue to deliver on our performance even though residential sector housing approvals have softened, leading to lower home building commencements, impacting steel volumes,” said InfraBuild´s CEO, Francisco Irazusta. “Pleasingly, non-residential and engineering construction work remain at high levels,” he added.

The net profit figure of $40 million for the six months to December 31 last year compares with a profit of $160.2 million in the corresponding period a year ago. Similarly, earnings before interest and tax were down 50% to $144 million. Net operating cash flow for the half of $62 million was off by $210 million from a year ago. “For the half, we have reinvested significant capital expenditure of around $66 million back into our operations to enable productivity and operational benefits such as investing in our New South Wales mesh business to provide more competitive products and solutions to our customers, purchasing new equipment and machinery, and upgrading our operating assets, ensuring their optimal performance and reliability, enabling us to deliver the best service for our customers,” said Mr Irazusta.

InfraBuild is one of the best-performing assets in the global conglomerate GFG Alliance, owned by British industrialist, Sanjeev Gupta. However, it has the heavy burden of a 14.5% interest rate on USD 350 million in debt it refinanced last November. Furthermore, the Australian Financial Review reports that an investor presentation last month evidenced the fact InfraBuild is being used to support under-performing parts of GFG Alliance. The AFR says the presentation showed a transaction to Liberty Czestochowa Spolka Z (a Polish entity within GFG Alliance). InfraBuild said that, as at December 31, the Polish entity owed $52 million, and “due to the increasing risk of recoverability”, a $21 million “credit loss provision” had been recognised. The presentation also stated that on January 30 this year a $10 million loan was entered into with the ultimate shareholder, Mr Gupta, for “reimbursement of certain expenses” incurred by the consolidated group of Gupta companies.

Finally, ASN´s companion website AustralianSteel.com regularly publishes special product features on individual sectors within the overall steel industry. Here´s a recent example of one on wire products (https://australiansteel.com/wire-products-spf-nov23). The next feature (in April) will be titled: Importers. So, if you´re a business involved in the importing and/or transportation of steel, here´s a great opportunity to be seen by a large domestic and international audience. In May, the special feature topic will be stainless steel, and in June it´ll be: New Zealand. Every steel and metals business in New Zealand is invited!